March 08, 2010

The Quest for Cash: Young Drivers Know You Need Dough to Go

In the perfect IndyCar world (at least for some race fans) there would be 40 strong teams, and those teams would take a corporation-like approach to hiring drivers:

Advertise the opening

Take applications

Evaluate resumes

Interview candidates

Check references

Hire based largely on merit

So why not do that in racing?

Racers say it starts with the lack of 40 strong teams, but goes beyond that and quickly gets into market forces like supply and demand.

“As far as I know racing has always been expensive, so there are always drivers who do not get opportunities” said Ed Carpenter, a 6-year IndyCar veteran driver who finds himself unemployed into 2010. “There are always going to be more good drivers than there are good cars, especially sponsored cars (cars where teams find all the sponsorship). I think we all wished that getting a ride was more merit based, but it is unrealistic to think that there will ever be a system where it is fully merit based.”

Pause here to lament if you must, but ARCA driver and long-time sponsor chaser Leilani Münter said if all you had to do was shut up and drive, maybe the merit-based model will work. But today’s race teams expect more.

“Today drivers have to do so much more than drive the car,” Münter said. “You have to be a spokesperson, have good media presence, public speaking skills and be approachable to fans. The days of just driving went away a long time ago. You have to do well both on and off the track; you have to be the whole package.”

“The whole package” may not have the most wins, or even very many wins at all. Danica Patrick, an undeniable superstar when it comes to attracting sponsors and getting them publicity, has one win in the last decade. Yet her team is constantly on the rev limiter with cash.

So what do sponsors want? What seals the deal?

Shannon McIntosh, a 20-year-old from Ohio who has been racing since she was five, says sponsors want what they have always wanted …

“Plain and simple, it’s ‘How can you (drivers) sell a company’s product?’” McIntosh said. “Sponsors want to know how can you endorse them positively and increase their sales?”

But today it goes beyond simply driving around with a logo on your car. The Driver is becoming The Brand Representative, McIntosh said, and winning a sponsor is far more complex than showing them your victory circle photos and first-place hardware.

“Obviously, a company isn’t going to want to put their name on the race car of a driver who has a terrible track record,” she said, “but marketing in motorsports must be very creative these days as television ratings are down, ticket sales are down and people want the most bang for their buck. Not to mention, many of the series’ I’ll look at for the next one, two or three years will still be untelevised since I am focused on developing my skills, so creative marketing is key.”

Carpenter said there are also external forces at work that the driver has little control over.

“First and foremost to land a quality sponsor in IndyCar they have to want to be involved with the series and what it stands for,” said Carpenter. “Once sponsors recognize that this is a sport and series that they want to be part of, then you have to sell yourself as a driver and the team to work with you versus some other team.”

The Competition is Brutal

While young drivers stop short of describing the competition for sponsorship as a "knife fight in an alley," they will go all the way to "dog-eat-dog." Alison Macleod, a 20-year-old Canadian with five championships at various levels to her name is looking to break into ARCA or NASCAR Canada after becoming "the winningest female driver in USAC history" last year. She said the tough economy just adds intensity of the dog fight.

“Everyone has been looking for sponsorship,” she said. “I think it’s just harder to find so it seems like more competition. It’s always been a battle for everyone all the way from cup to go-karts. Hopefully things start to pick up shortly.”

“I really don’t think (the quest for sponsorship) has changed a whole lot,” said Carpenter. “There are a lot of the same sponsors in the sport now that were there back then. Obviously some of the sponsors that were around before are now gone, but I wouldn’t say that it is more intense or insane now; I think that the landscape of our sport and nation have changed, and marketing dollars are harder to come by. But from the team’s standpoint, it was a challenge to find funding when I started in 2003 and it still is today.”

And while everyone remains friendly, McIntosh said business is business, and just like other business competitors, drivers don’t run their mouths when they have a possible sponsor lined up.

“In this world you don’t tell anyone who you are ‘talking to’ (about possible sponsorship) in fear that word would get out and you’ll have your sponsor pulled out from under you because someone offered them a better deal,” said McIntosh. “I mean, there are so many potential sponsor companies out there that it’s not directly comparable to the competition on the track, but everyone is cut-throat -- even drivers who have never had to look for money in their lives.”

What’s Hard to Secure is Easy to Lose

If the days of merit-based driving are gone, the days of sponsorship deals being made on a handshake seem laughably prehistoric. Drivers today operate under this credo -- don't get excited until the check clears.

“We had a company that was prepared to fully fund the season in ARCA (probably about $1.5 million or so) and everything was set,” said Macleod. “They had a meeting with the team and we were ready to go, the team got the cars all ready and I got licensed, etc. Then when the contract was supposed to be sent, it never arrived and all contact was cut. It was very disappointing. It’s like a roller coaster of emotion.”

Macleod currently has a sponsor interested in finding a NASCAR Canada ride — which takes about $500,000 in support — but the company experienced some economic setbacks so they had to postpone the commitment for a year. “Sponsorship hunting can be a full-time job, and the economy the way it is, does not help at all,” Macleod said.

IndyCar veteran Sarah Fisher can sympathize. Sponsors have come and gone throughout her 10-year IndyCar career, even forcing Fisher out of open-wheel racing entirely and into minor-league stock cars for a year.

In 2008, her fledgling Sarah Fisher Racing LLC thought they had energy drink sponsor nailed down for an Indy500 ride. Contracts were signed, cars were painted — but the promised check for $850,000 never arrived. Turned out that the people who signed the contract with Fisher did not have a done-deal with the energy drink, so the drink brand was not liable.

Fisher sued the group she had a contract for $2.2 million, inducing punitive damages. She won a "default judgment" (which essentially means the other party failed to defend itself in court), but the money will likely never be collected due to the sued parties' financial status.

Other sponsors, including text4cars.com and Hartman Oil, stepped forward, and fans themselves donated an estimated $50,000 to help Fisher offset the sponsorship loss and run in the 2008 Indy 500.

In January 2010, it was Carpenter's turn to feel the sting of the racing version of a layoff when he and his Vision Racing team lost their long-time primary sponsor, Menards.

“It’s absolutely like being laid off (in the non-racing business),” said Carpenter. “It’s a very strange position to be in. It’s so hard to find a sponsor right now, just as it’s extremely hard to find a good job in the marketplace. I never have had more than a one-year contract my entire career, so there are times every off-season that I have ever had that my future was unclear. In the past it always has worked out far better than it is right now, but you just have to keep looking for opportunities.”

The Bigger the Thrill, the Bigger the Bill

For Münter -- a woman of relatively modest means -- the quest for cash has always been a fact of racing life. So if she wants to continue her new career in stock cars with more ARCA races and maybe move up to Nationwide, she has to keep working the phones.

“I would say it’s been intense competition (for sponsorship) from day one,” Münter said. “I can’t race without sponsorship so I am constantly working to make that happen. Since I have been racing, that’s how it has been.”

Other drivers say the higher you climb, the more time you spend looking for money to race. “We always have had sponsors all through my racing career,” said Macleod. “It wasn’t much at the beginning but it didn’t cost a lot to start. But we have always been lucky with sponsors whether it’s Bell sponsoring me with helmets and gear, Lady Eagle with suits and things like that.”

McIntosh said her blue-collar background meant she got an early start on trying to find outside support for her racing. “My family and I started seeking partners and support when I was 15 (five years ago) so it has been a few years. I’ve realized my career will not go on unless I learn how to promote myself not only as a driver on the track, but off the track as well. It has been a huge learning experience and I now do all of my own marketing/partnership work so that I can secure funding for all things racing.”

How Do Drives Know if They can Hack it?

Racers say the test is pretty simple: Do you LOVE racing? Really, really love it. Do you wake up every morning hoping you get to drive fast that day? Because that's kind of passion increasingly required to be a race car driver. The same desire, if focused at a more traditional career, would likely land anyone in a comfortable corporate job in middle-class America.

But cubicle drivers never experience the rush of a well timed pass for the lead, the ego boosted of mob of autograph seekers or the sweet sound of fans cleaning out their merchandise trailer like locusts devouring a corn field.

But are the costs to high to justify the benefit? "There is no doubt you have to love the sport and I do more than anything,” says Macleod. “I have missed things like high school graduation and prom for racing and don’t regret it at all.”

For Fisher, her struggles have led to a new career as small business owner. "I really do love it," Fisher said last March. "I am responsible yes, for a lot. But, I get to
work with (husband) Andy and we, together, see the big picture of our
plans. That’s what makes me the most proud, is that we can look each
other in the eye and know we achieved this together and did so as good
people."

McIntosh can distill her drive to one word, "NinTai," which she believes in so strongly she had it tattooed on her right foot. “It’s an all inclusive Japanese term that embodies the meaning of perseverance," said McIntosh. "Of course my family, friends and supporters who believe in me help me keep going too. I’m very stubborn and passionate and won’t stop working until I’m where I want to be. I’m never content.”

Münter offers simple advice for success that was as powerful and challenging in 1810 as it is in 2010.

“Never give up. You never know when you will get your break. Just keep working at it," she said. "Many drivers give up and go home because they can’t take all the disappointments. Racing is full of disappointments but you have to be determined enough and passionate enough to love it anyway. That’s the difference between the drivers who eventually make it and the ones who give up because it’s too hard.”

You're absolutely right, Jerry. A great article showing how difficult it is to find sponsorship but also in a way, a primer for young drivers to follow in their quest to make it to the big time in motorsports.

I think one of the challenges unique to motorsport is that so many drivers themselves (the athletes) need to go find and SELL to sponsors just to get in the game. This means that drivers all of a sudden have to be marketers and business people and sellers, which drivers are not.

Drivers should be good at 2 things:
1)Driving and
2)Representing their sponsors (i.e. good with media, etc.).

But actually selling to sponsors and securing sponsors is a whole other game...Building a strong business case & proposal for a sponsor and then selling that to the sponsor is very difficult and a specialized skill. I know of no other pro sport where the athletes themselves (or their agents) have to sell to sponsors just to get in the game.

Other pro sports have athletes (and their agents) who must sell the athlete to a particular team but the team and the league sell the sponsorship. Of course many athletes go and get additional endorsements to boost their salaries but at least they don't have to buy their way onto the field/rink/track.

I think this is a huge issue and if motorsport wants to continue being successful in the competitive sports entertainment business, it needs to find a better model whereby all the athletic "talent" (the stars of the show!) can focus on being great athletes and stars rather than trying to hussle sponsorship, like so many of them have to do.